This may lead him to become withdrawn, which in turn could lead to personality problems. A lack of concentration could also affect a child's studies and grades, which would lead to its own set of problems.
If you see that your child's imagination and daydreaming are getting in the way of his regular activities, try and reduce or stop this tendency at once. You can try reducing the amount of television that he watches. This medium helps your child to escape from the mundane realities of his everyday life.
It also introduces new characters, graphics, and plots that he could reproduce in his daydreams. Sometimes, television could also overstimulate the imagination to the point of keeping a child awake at night, and the lack of sleep can lead to a lack of concentration.
Increase the amount of physical exercise your child gets. Often, the lack of adequate physical activity is compensated by a more than adequate mental exercise, which increases a child's daydreaming tendencies.